China bans Nvidia chips outright – Focus on BoE rate decision

Asia market update: FOMC cuts with cautious bias; JP/KR equities power to new records; China bans Nvidia chips outright; Focus on BOE rate decision.

General trend and developments

- The Fed indeed cut by 25bps and dot plotted 50bps of further cuts this year, but Chair Powell was cautious in his comments, directly stating at one point during the Q&A that it is difficult to judge where to go from here; Fed is still concerned about inflation potentially rearing its head again while also being concerned about the job market worsening from here.

- The Fed only sees one further cut in 2026, so the market found itself needing to price out some of the expectation of more than one cut next year. In sum, the dollar bounced off multi-year lows while rates reversed and moved higher as Powell spoke, while gold came off its highs. Equities initially fell but ended back around where they started the day, then kept moving higher during the Asia session.

- Nikkei 225 briefly hit another fresh record high just above 45K, as did the Kospi, with Hynix rebounding from yesterday’s correction to be up another +6.5% while Samsung hit 13-month high.

- ASX underperformed Asia again as the ASX Energy index fell -5.5% on Santos (-12% after Adnoc’s $19B offer fell through). Woodside Energy also down -5.5%.

- New Zealand second quarter GDP a lot worse than expected, plunging back to -0.9%. Three of the past five quarters have now registered contraction. New Zealand 2-year swap rate -10bps after big GDP miss with the Kiwi dollar falling -0.8%. Westpac bank now expects RBNZ to cut cash rate to 2.25% by Nov, lower than the RBNZ Terminal rate of 2.50%.

- Japan senior LDP lawmaker Takaichi confirms intention to run in the LDP leadership election.

- Thailand Dep Fin Min warned the Baht is likely to rise further due to capital inflows into bonds and equities.

- China govt formalized the bias against Nvidia by directly ordering tech firms to stop buying Nvidia chips and instead purchase domestic AI processors from Huawei, Cambricon and others.

- The sacking of Jimmy Kimmel from ABC (owned by Disney) for insensitive and false remarks after the assassination of Charlie Kirk last week looks to be only the start of the story, as broadcaster and ABC affiliate Sinclair called for the FCC and ABC to take additional action. Fellow ABC affiliate Nexstar also said it would preempt Kimmel's show indefinitely, starting tonight. The FCC Chairman said the FCC will force its "public interest obligation" and Pres Trump weighed in by saying it was “Great News for America”.

- US equity FUTs +0.5% to +0.8% during Asian trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Thu Sept 18th NZ, (Thu eve BOE Rate Decision, FR protests /strikes against fiscal plans).

- Fri Sept 19th NZ Aug Trade Balance, JP Aug CPI, JP BOJ Rate Decision, (UK Aug Retail Sales).

Holidays in Asia this week

- Mon Sept 15th Japan.

- Tue Sept 16th Malaysia.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.3% at 8,789.

- Australia Aug employment change: -5.4K V +21.0KE; unemployment rate: 4.2% V 4.2%E.

- US President Trump said Australia PM Albanese to visit him 'soon' - Press [overnight update.].

- NEW ZEALAND Q2 GDP Q/Q: -0.9% V -0.3%E; Y/Y: -0.6% V 0.0%E.

- New Zealand 2-year swap rate -10bps after big GDP miss.

- Westpac now expects RBNZ to cut cash rate to 2.50% in Oct and to 2.25% in Nov.

- New Zealand Finance Min: Appoints Hayley Gourley to the RBNZ Monetary Policy Committee (MPC), replacing Buckle.

- New Zealand sells total NZ$450M vs. NZ$450M indicated in 2030 and 2035 bonds.

** Note: RBNZ Terminal rate is 2.50%.

China/Hong Kong

- Hang Seng opens -0.2% at 26,863; Shanghai Composite opens flat at 3,876.

- China said to have dropped its Google antitrust probe, amid US trade talks - FT.

- China Aug Swift Global Payments (CNY): 2.9% v 2.9% prior.

- China Defence Min Dong Jun: World is overshadowed by Cold War mentality, hegemony, protectionism - comments at Xiangshan Forum.

- Huawei: Notes plans to launch its Ascend 950PR chips during Q1 2026, said to have disclosed plans to new AI chips through 2028; said to unveil new AI chip technology to 'rival' Nvidia - Press.

- HKMA cuts base rate by 25bps to 4.50% (as expected), tracking the Fed.

- China ultra-long special government bond sales are 'nearly done'; as of Sept 17th, China has sold ~CNY1.2T of these bonds [>88% of the total planned amount for 2025] - China Securities Daily.

- Cyberspace Administration of China (CAC) orders tech firms to halt Nvidia chip purchases; Push for domestic AI supply - FT.

- Goldman analysts on China: Raises 2025 GDP growth forecast from 4.6% to 4.8% [overnight update].

- (HK) Follow Up: HKMA and MAS enhance cooperation on banking supervision [overnight update].

- China PBOC sets Yuan reference rate: 7.1085 v 7.1013 prior (weakest since Sept 3rd).

- China PBOC Open Market Operation (OMO): Injects CNY487B in 7-day reverse repos; Net injects CNY195B v injects CNY115B prior.

Japan

- Nikkei 225 opens +0.3% at 44,896.

- Japan LDP official Takaichi is expected to speak to the media at 4 GMT regarding candidacy for the LDP leadership race- Jiji.

- Japan LDP lawmaker Takaichi confirms intention to run in the LDP leadership election.

- Japan sells ¥4.3T vs. ¥4.3T indicated in 3-Month Bills; Avg Yield: 0.4569% v 0.4352% prior; bid-to-cover: 2.81x v 3.11x prior.

- More reports Bank of Japan (BOJ) will hold rates steady at decision this week – Nikkei [overnight update].

Korea

- Kospi opens +0.6% at 3,432.

- South Korea Pres Lee: Still believes it is necessary to revitalize the stock market - financial press.

- Samsung Group: Plans to hire 60.0K employees in South Korea over 5 year period; the hiring will focus on chips, biotech and AI.

- Bank of Korea (BOK): More policy room with focus on domestic conditions - statement post US Fed rate decision.

- South Korea Finance Ministry: To closely monitor financial market risks - statement post-US Fed decision.

- China calls on Korea for joint efforts to safeguard free trade [overnight update].

Other Asia

- Thailand PM Anutin: Government will 'quickly' restore stronger economic growth.

- Philippines Central Bank (BSP) official: Reiterates may be near the appropriate interest rate, moving to the 'sweet spot' regarding the interest rate level.

- Indonesia central bank (BI) cuts bi rate by 25bps to 4.75%; not expected [overnight update].

- Indonesia Central Bank (BI) Gov Warjiyo: Domestic economic growth needs to be strengthened - pre-rate decision press conference(ID) Indonesia Central Bank (BI) Gov Warjiyo: Domestic economic growth needs to be strengthened - pre-rate decision press conference [overnight update].

North America

- (US) Agriculture Secretary said Trump tariffs could fund 'bailout' for US farmers - FT.

- (US) FCC Chairman Carr: FCC will force the public interest obligation - Fox News interview.

- Calls for FCC, ABC to take additional action on Jimmy Kimmel's show; Sinclair to indefinitely preempt Kimmel's show - post on X.

- (US) Pres. Trump: Great News for America: The ratings challenged Jimmy Kimmel Show is CANCELLED. Congratulations to ABC - post on Truth Social.

- META CEO Zuckerberg: Debuts new version of META's Ray-Ban glasses; Will deliver "superintelligence" - Annual Connect Keynote.

- US House clears procedural hurdle for floor vote on stopgap funding measure to avoid Gov shutdown.

- (BR) Brazil central bank (BcB) leaves Selic target rate unchanged at 15.00%; as expected; unanimous decision.

- (US) MBA Mortgage Applications w/e Sept 12th: 29.7% v 9.2% prior (2nd straight weekly rise).

- (BR) Brazil Sept FGV Inflation IGP-10 M/M: 0.2% v 0.3%e; Y/Y: 2.9% v 2.8% prior.

- (CA) Bank of Canada (BoC) cuts interest rates by 25bps to 2.50%; as expected; Removes forward guidance on rate cuts from policy statement.

- (US) Aug housing starts: 1.307m v 1.365me; Building permits: 1.312M V 1.370ME.

- (CA) Bank of Canada (BoC) cuts interest rates by 25bps to 2.50%; as expected; Removes forward guidance on rate cuts from policy statement.

- (US) DOE crude: -9.3M V 0ME (lowest since 2001); GASOLINE: -2.3M V 0ME; DISTILLATE: +4.0M V +0.5ME.

- (CA) Bank of Canada (BOC) Gov Macklem: BOC considered holding rate steady today; Inflation picture hasn't changed much since Jan; We're not being as forward-looking as normal - post rate decision press conference.

- (US) FOMC cuts target range by 25bps to 4.00-4.25% range; as expected; job gains have slowed, unemployment has edged up but remains low; inflation has moved up and remains 'somewhat elevated'.

- (US) FOMC summary of economic projections (Sep) for Sept: Increases median forecast projection for 75 bps of rate cuts in 2025 (prior 50 bps), maintains 25 bps of rate cuts in 2026 (prior 25 bps).

- (US) Fed Chair Powell: Revised job creation numbers show that labor market no longer solid; Should be moving rates in direction of neutral; Very different picture of risks to labor market since last FOMC meeting; Was NO widespread support for 50 bps cut today.

Europe

- (IE) Ireland Central Bank issues Quarterly Bulletin: Early signs of resilience as headwinds remain.

- (PT) Bank of Portugal Gov nominee Pereira: Central banks should be proactive towards price stability and ensure inflation targets are actually met.

- (CZ) Czech Central Bank (CNB) Dep Gov Frait: No reason to discuss further Czech rate cuts; Too early to consider raising Czech rates.

- (EU) Foreign Policy Commissioner Kallas: Russia has escalated Ukraine attacks in recent weeks; Must hit Russian banks, crypto and shadow fleet harder.

- (US) House Speaker Johnson: Need short term "clean" CR to keep government open - TV.

- (EU) ECB’s Nagel (Germany): ECB is well advised to remain cautious given uncertainties.

- (FR) French Conservative Marine Le Pen: Intends to wait to hear PM Lecornu's budget proposals.

Levels as of 01:20 ET

- Nikkei 225 +1.4%, ASX 200 -0.6%, Hang Seng -0.6%; Shanghai Composite flat; Kospi +1.8%.

- Equity S&P500 Futures +0.5%; Nasdaq100 +0.7%; DAX +0.5%; FTSE100 +0.2%.

- EUR 1.1791-1.1829; JPY 146.77-147.25; AUD 0.6626-0.6659; NZD 0.5908-5970.

- Gold -0.7% at $3,692/oz; BTC +0.1% at $117,400; Crude Oil -0.4% at $63.79/bbl; Copper -0.2% at $4.6055/lb.